Legislation and News for Tax Professionals
Beginning in 2010 - Threshold requirement for e-filing lowered
Minnesota statute was amended to reduce the current threshold for required electronic filing for preparers. Starting in 2011, tax return preparers who prepared 10 or more returns in the previous year will be required to e-file all returns. The past threshold for tax preparers was 100 individual income tax returns.
Preparers who file a return on paper are subject to a $5.00 paper filing fee per return. To submit a payment, use Payment Voucher – PV50 or use E-file Minnesota to make the payment. Returns exempted include returns required to be file on paper by the Commissioner of Revenue.
Power of Attorney - failure to file
Minnesota Administrative Rule 8052.0300, Practice of Attorneys, Accountants, Agents, and Preparers before Department of Revenue addresses “disreputable conduct” that can lead to suspension or disbarment from representation before the Minnesota Department of Revenue. Subpart 6 - Disreputable conduct for which any attorney, accountant, agent, or preparer may be barred or suspended from practice includes but is not limited to:
Regulation of tax return preparers
- Conviction of any criminal offense under a state or federal tax statute, or conviction of any crime involving dishonesty or breach of trust.
- Preparing or filing for oneself or another a false or fraudulent Minnesota income tax return or other statement on which Minnesota income taxes or a refund thereof may be based, knowing it is false or fraudulent.
- Willful failure to prepare or file a Minnesota income tax return for oneself or another in violation of the applicable income tax statutes or rules.
- Willful failure to prepare and file an amended Minnesota income tax return knowing that a material error or omission was made on the original return.
- Willful failure to recommend to a client that an amended Minnesota income tax return be prepared and filed, knowing that a material error or omission was made on the original return.
Beginning in 2009 - Penalty for failure to provide federal ID
Tax preparers who prepare Minnesota individual income tax returns are required to provide their federal preparer identification number on the Minnesota return. Failure to do so will result in a $50 penalty for each failure. The federal ID required must be either the EIN or PTIN.
Beginning in 2005 - Refund Anticipation Loans
MS 270.30 was amended and recodified to apply the standard of conduct and civil penalties to all tax return preparers, not just preparers who offer refund anticipation loans. This statute does not apply to attorneys, certified public accountants, or enrolled agents.
Standard of conduct
The law states that no tax preparer shall:
- Without good cause fail to promptly, diligently, and without unreasonable delay complete a client’s tax return.
- Obtain the signature of a client to a tax return or authorizing document that contains blank spaces to be filled in after it has been signed.
- Fail to sign a client’s tax return when payment for services rendered has been made.
- Fail or refuse to give a client a copy of any document requiring the client’s signature within a reasonable time after the client signs the document.
- Fail to retain for at least four years a copy of individual income tax returns.
- Fail to maintain a confidential relationship between themselves and their clients or former clients.
- Fail to take commercially reasonable measures to safeguard a client’s nonpublic personal information.
- Make, authorize, publish, disseminate, circulate, or cause to make, either directly or indirectly, any false, deceptive, or misleading statement or representation relating to or in connection with the offering or provision of tax preparation services.
- Require a client to enter into a loan arrangement in order to complete a tax return.
- Claim credits or deductions on a client’s tax return for which the tax preparer knows or reasonably should know the taxpayer does not qualify.
- Charge, offer to accept, or accept a fee based upon a percentage of an anticipated refund for tax preparation services.
- Under any circumstances, withhold or fail to return to a client a document provided by the client for use in preparing the client’s tax return.
Disclosure requirements for refund anticipation loans
The tax preparer must disclose before or at the same time that an offer is being made to the client for a refund anticipation loan.
The tax preparer must provide a written statement to the client stating all of the following:
- They are getting a loan and the percentage rate of the loan
- The refund will be used to pay for said loan
- They can get their refund in about two weeks through electronic submission and direct deposit of return refund
The tax preparer must also provide an itemized bill for services charged.
Enforcement penalties and civil action
The Commissioner of Revenue may impose an administrative penalty of not more than $1,000 per violation and may terminate a tax preparer’s authority to electronically submit returns. Since any violation of this section is considered an unfair, deceptive, and unlawful trade practice within the meaning of section 8.31, the client may bring civil action and a court must award actual damages and relief as appropriate.
Published names of convicted tax return preparers
The Commissioner of Revenue is authorized to publish the names of tax return preparers who have been convicted of preparing or aiding in the preparation of fraudulent tax returns, under MS 289A. A written notice is required to be sent by certified mail to the tax preparer 30 days before the publication of their name. The commissioner is also required to include in the list tax preparers who have been subject to penalties. This is effective August 1, 2005.
Minnesota statute was clarified to state that administrative penalties already authorized in statute are public data.
Penalties are not considered to have been assessed if either of the following is true:
- The preparer is contesting the penalty.
- The appeal period has not expired.
Penalties are excluded from publication if either of the following is true:
- The commissioner is reviewing or adjusting the penalty; or
- The preparer is deceased.
Exchange of data
The Commissioner of Revenue is now directed to refer complaints received about tax preparers who are accountants to the State Board of Accountancy and the Lawyers Board of Professional Responsibility. It also directs that any complaints received by these professional agencies, for preparers who are not under their jurisdiction be referred to the Commissioner of Revenue. Data shared under these provisions are to remain private until penalty is imposed either as provided in statute or by the Lawyers Board of Professional Responsibility.
$500 Preparer penalty
MS 289A.60 subd. 13
Beginning in 2005 – Reckless disregard. The $500 preparer penalty has now been extended to those who act with reckless disregard of the law or rules. Previous law states that “with respect to a return or claim for refund is due to a willful attempt in any manner to understate the liability for a tax by a person who is a tax return preparer” and is applied to individual income tax and property tax filings. This is effective December 31, 2005.
Nongame wildlife check off
Effective for tax year 2005 and after, Minnesota statute now requires tax preparers to give written notice to their clients of the option available for corporate franchise, individual income, and property tax refund returns to contribute to the nongame wildlife fund.
To help keep preparers informed of timely information, the Minnesota Department of Revenue will send updates to preparers and other interested parties who subscribe to the department's email subscription service.
These updates, which are issued on an “as-needed” basis, will provide both of the following:
- Urgent messages, such as notices of incorrect error codes, ways to correct identified problems, or information we encourage you to pass on to your clients.
- Updates, statistics, reminders and other information pertinent to tax preparers during the filing season.
Help prevent fraud
We encourage you to be on the lookout for fraud. We have seen an increase in the number of victims for W2 phishing scams. To raise awareness about the fraud attempts, we created a poster you may put up at your workplace, share with coworkers, or put in employee orientation books.
For help with technical problems related to electronic filing of the M1 and M1PR, such as error code reconciliation, transmission failure or registration issues, contact Electronic Information at:
Efile.firstname.lastname@example.org or call: 651-556-4818
Individual income tax or Property Tax Refund
Business Income Taxes (Corporation Franchise Tax, Partnership Tax, S Corporation Tax, Estate Tax, Fiduciary Tax)
Be sure to include your name, phone number and email address, if different than the return email address. Our goal is to answer all emails within three business days. If your question requires additional research that may go beyond the three-day turnaround goal, we will acknowledge your inquiry and respond as soon as possible.